Economic Brief

March 2013, No. 13-03

Fed Credit Policy during the Great Depression

Responding to the financial crisis of 2007-09, the Federal Reserve made loans to nonbank firms and purchased (and continues to purchase) mortgage-backed securities. These actions are examples of credit policy, which is distinct from monetary policy. But this is not the first time the central bank has engaged in credit policy. During the Great Depression, Reserve Banks exercised broad authority to lend to nonbank businesses.